Market Remarks

Morning Notes – Wednesday July 14, 2021

Sunil Sharma

Directional Bias For The Day:

  • S&P Futures are higher;
  • The odds are for an up day — watch for a break below 4361.50 for a change of sentiments
  • Key economic data report due during the day:
    • PPI ( 1.0% vs. 0.6% est.; prev. 0.8%) at 8:30 AM
    • Core PPI ( 1.0% vs. 0.5% est.; prev. 0.7%) at 8:30 AM
    • Fed Chair Testimony

Directional Bias Before Open:

  • Weekly: Uptrend
  • Daily: Uptrend
  • 120-Min: Up-Side
  • 30-Min: Up-Side
  • 15-Min: Side
  • 6-Min: Side-Up

Key Levels:

  • Critical support levels for S&P 500 are 4366.92, 4359.98, and 4329.38
  • Critical resistance levels for S&P 500 are 4379.68, 4392.37, and 4401.62
  • Key levels for E-mini futures: break above 4371.25, the high of 1:30 PM on Tuesday and break below 4361.00, the low of 6:00 AM

Pre-Open

  • On Tuesday at 4:00 PM, S&P futures (September 2021) closed at 4361.50 and the index closed at 4366.52 – a spread of about -5.00 points; futures closed at 4361.25 for the day; the fair value is +0.25
  • Pre-NYSE session open, futures are higher – at 8:00 AM, S&P 500 futures were up by +7.25; Dow by +23, and NASDAQ by +70.00

Markets Around The World

  • Markets in the East closed mostly lower – Sydney and Mumbai closed up;
  • European markets are mostly lower – Italy is higher
  • Currencies (from two weeks ago):
    Up Down
    • Dollar index
    • GBP/USD
    • USD/CAD
    • INR/USD
    • EUR/USD
    • USD/JPY
    • USD/CHF
    • AUD/USD
    • NZD/USD
  • Commodities (from two weeks ago):
    • Energy futures are higher
    • Precious metals are higher
    • Industrial metals are higher
    • Most soft commodities are mostly lower
  • Treasuries (from two weeks ago)
    • 10-years yield closed at 1.415%, down -6.5 basis points from two weeks ago;
    • 30-years is at 2.038%, down -5.8 basis points;
    • 2-years yield is at 0.269%, up +1.1 basis points;
    • The 10-Year-&-2-Year spread is at 1.146, down from 1.222
  • VIX
    • At 16.76 @ 6:45 AM; down from the last close; below 5-day SMA;
    • Recent high =  21.82 on June 21; low =  14.10 on June 29
    • Sentiment: Risk-On

The trend and patterns on various time frames for S&P 500:

Monthly
  • Confirmed Uptrend
  • May 2021 was a Doji with a small upper shadow and a long lower shadow; at all-time closing and intra-month highs;
    • Stochastic %K above %D near 100;
    • RSI-9 near 80; broke above a downtrend line from January 2018
    • Above the upper band of a 120-month regression channel;
  • The sequence of higher highs and higher lows
Weekly:
  • The week ending on July 9 was a long-legged candle, like a Doji, with a small upper shadow
    • Stochastic (9,1, 3): %K is above %D; near 100
    • RSI (9) is just above 70
  • The week was up +17.21 or +0.4%; the 5-week ATR is 83.35
  • An up week; fourth in the last five weeks, and seventh in the last ten weeks
  • The weekly pivot point=4343.51, R1=4397.64, R2=4425.74; S1=4315.41, S2=4261.28; S1 pivot level was breached
  • Above 10-week EMA, 39-week SMA, and 89-week SMA
  • Uptrend since March 23, 2020
Daily
  • A relatively small red candle with small lower and upper shadows
    • %K crossed below %D; from below 90
    • RSI-9 is turned below 70; below 8-day EMA
  • Above 20-day EMA, 50-day EMA, 100-day, and 200-day SMA
  • Uptrend
2-Hour (E-mini futures)
  • Drifting lower since 10:00 AM on Tuesday from the all-time high;
    • RSI-21 moving up from near 36 since 2:00 AM after making a Bullish Divergence; near 55
    • Above EMA20, which is above EMA10 of EMA50
  • Bias: Up-Side
30-Minute (E-mini futures)
  • Drifting sideways to down since 9:30 PM;
    • RSI-21 rising since 1:00 Am from below 40 to near 60
    • Above EMA10 of EMA50, which is above EMA20
  • Bias: Up-Side
15-Minute (E-mini futures)
  • The Bollinger Band (20, 2.0) is moving up since 4:45 AM
  • The Bollinger Band is expanding a bit since 4:45 AM with price near the upper band
    • Stochastic (9, 1, 3): %K is crisscrossing %D higher
  • Bias: Side

Previous Session

Major U.S. indices closed lower on Tuesday, July 13 in higher volume. Major indices opened lower and after the first half-hour of trading recouped the initial losses and got into the green. However, the market started to slide in the afternoon and closed near the lows for the day.

From Briefing.com:

The S&P 500 (-0.4%), Nasdaq Composite (-0.4%), and Dow Jones Industrial Average (-0.3%) recorded modest losses on Tuesday, easing back from record territory as investors assessed hot CPI data for June, negative reactions to bank earnings, and a relatively weak 30-yr bond auction. The Russell 2000 fell 1.9%. […]

It wasn’t until the results of a weaker-than-average $24 bln 30-yr bond auction were released at 1:00 p.m. ET that Treasury yields spiked, which ultimately took some wind out of the growth stocks. The 10-yr yield settled higher by five basis points to 1.42% while the 2-yr yield increased three basis points to 0.25%.

Declining issues widened their advantage over advancing issues to a 3:1 margin (versus 2:1 before the bond auction results). The S&P 500 consumer discretionary (-1.2%), financials (-1.1%), and real estate (-1.3%) sectors lost more than 1.0% while information technology (+0.4%) was the only sector that closed higher.

[…]

WTI crude futures settled higher by 1.5%, or $1.14, to $75.24/bbl. The U.S. Dollar Index advanced 0.6% to 92.78.

[…]
  • Total CPI increased 0.9% month-over-month (Briefing.com consensus +0.5%) — the largest one-month increase since June 2008 — and core CPI, which excludes food and energy, also increased 0.9% (Briefing.com consensus 0.5%). On a year-over basis, total CPI is up 5.4% — the largest increase since August 2008 — and core CPI is up 4.5%, which is the largest increase since November 1991.
  • […]
  • The Treasury Budget for June showed a $174.2 bln deficit, versus an $864.1 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the June deficit can’t be compared to the May deficit of $131.9 bln. June marked the 21st consecutive month that the Treasury has seen a budget deficit.
  • […]
  • The NFIB Small Business Optimism Index for June increased to 102.5 from 99.6 in May.
[…]
  • S&P 500 +16.3% YTD
  • Dow Jones Industrial Average +14.0% YTD
  • Nasdaq Composite +13.9% YTD
  • Russell 2000 +13.4% YTD
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